OPEC courts Azerbaijan as shale oil threat grows

Baku was the oil capital of the former Soviet Union and even tsarist Russia.

Azerbaijan is reportedly discussing possible membership in the Organization of the Petroleum Exporting Countries (OPEC) which has welcomed the initiative.

The discussions follow the energy-rich Eurasian country’s close cooperation with OPEC to cut oil production by 1.8 million barrels per day (bpd) in order to stabilize the market.

OPEC Secretary-General Mohammad Barkindo was in Baku on Sunday and Monday to discuss “prospects of future cooperation between Azerbaijan and OPEC” with President Ilham Aliyev and Energy Minister Parviz Shahbazov.

“There are three options. First - OPEC membership, the second - to become an associate member and the third - to continue cooperation the way it is now,” Reuters quoted two unnamed sources familiar with the talks as saying.

Azerbaijan’s current oil production stands at around 850,000 bpd. The country is one of the birthplaces of the oil industry, with Baku being the oil capital of the former Soviet Union and even tsarist Russia.

"All options are under consideration. The future of Azerbaijan as the cradle of the oil industry lies in OPEC,” Russia’s Tass news agency quoted Barkindo as saying Monday.

“We share the same views, we share the same perspectives, we share the same interests and Azerbaijan has been fully implementing decisions that we have been jointly taking together,” he said in a separate interview with Azeri TV station Real TV.

OPEC is scrambling to reassert its role in the oil market in the face of growing threats from US shale oil. The organization currently has 14 members, including Gabon and Equatorial Guinea which joined it recently.

Russia has led a number of non-OPEC nations in an unprecedented cooperation with OPEC to drive oil prices higher after a period of steep plunge, which has harmed many countries including Azerbaijan whose economy is extremely dependent on oil revenues.

Barkindo said OPEC and Azerbaijan were thinking about how to upgrade relations beyond rebalancing the oil market. “All options, including membership, are under consideration,” Reuters quoted a source as saying.